The Greenbrier Companies, Inc. has closed on the acquisition of a 19.5 percent ownership stake in the Brazilian railcar manufacturer Amsted-Maxion Hortolandia for approximately $15 million. The acquisition, which was reported in January of this year, allows Greenbrier the option to acquire an additional 40.5 percent ownership interest no later than September 30, 2017.
Amsted-Maxion Hortolandia is owned by Amsted-Maxion, a 50/50 joint venture between Amsted Rail and Iochpe-Maxion, who will continue to own the remaining 80.5 percent of the company. Amsted-Maxion Hortolandia holds an estimated 70 percent annual market share in the South American new railroad freight car market. The company will use Greenbrier's investment to pay down outstanding debt and position the company for future growth.
With Greenbrier's acquisition, Amsted-Maxion Hortolandia will add Greenbrier's capabilities in freight car design, engineering, manufacturing, marketing and sales, and leasing to the business. Amsted Rail will continue to provide components including castings, bearings, wheels, axles and braking. Iochpe-Maxion, a Brazilian-based global auto parts supplier, will continue to provides access to customers and suppliers, and insight into local and financial matters.
Market demand in Brazil is forecast to exceed approximately 4,000 new railcars annually for the near term and potentially through the end of this decade, with longer term new railcar demand expected to significantly increase. The demand is expected to be driven by the country's investment in infrastructure, plans to expand and modernize the rail network, and plans to replace a railcar fleet in which more than 60 percent of freight rolling stock is 30 years or older.
Greenbrier expects Amsted-Maxion Hortolandia will achieve revenue enhancements that will make the investment accretive to Greenbrier's earnings by the second half of 2016.